New research explores how private equity firms profit from outsourcing in K-12 education

A new report from the Private Equity Stakeholder Project (PESP) analyzes the role of private equity-owned companies in outsourcing public school jobs across the U.S. As federal investment in public education continues to decline and the Trump administration seeks to dismantle the Department of Education, private equity is betting big on investments in the education sector.

Across a variety of industries, private equity firms notoriously pursue cost-cutting measures that negatively affect workers, including poor management and training, dangerous working conditions, lower wages, reduced working hours, and widespread layoffs. As schools struggle to manage services in the midst of staffing crises and other issues, private equity firms have invested in hundreds of companies that contract with school districts to provide tools and services that were once managed in-house. Unfortunately, outsourcing roles to private companies weakens the school environment, introducing profit motives to spaces that should prioritize student wellbeing over all else.

In addition to teaching itself, critical public school positions in healthcare, transportation, food service, data management, and more are being outsourced to private equity-owned companies. The report highlights a number of controversies that have been associated with the privatization of these roles, including accusations of wage and hour violations by PE-owned teacher staffing companies; reports of a PE-owned food service provider failing to provide enough food to feed all students at Brattleboro Union High School; and privacy breaches at private equity-owned student data management companies. ​​

“It bears repeating that profit motives should have no place within our public schools. Treating children with dignity and respect is essential to their healthy development. Mining kids for profit, on the other hand, is not,” said Azani Creeks, Senior Research & Campaign Coordinator at PESP and author of the report. “While outsourcing is often presented as a solution to public school staffing shortages, staffing agencies and management companies do not create new jobs or address the root causes of staffing crises. In fact, the weakened public school system that allows private contractors to flourish is the problem – without enough funding to pay staff what they deserve, working in public schools has become a less sustainable long-term career option.”

PESP analysis also shows that numerous pension funds that invest public school employees’ deferred wages are investing in the very same private equity firms that own companies used to outsource and privatize jobs in public education.

The report concludes with policy recommendations to ensure public schools are protected from private equity profit motives, including increasing transparency and protections around student data; requiring vendors to demonstrate cost savings in their proposals; insourcing operations in public schools as much as possible; and developing a bill of rights for student data privacy.